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Paper short abstract:

This article investigates the development of China’s carbon markets through the lens of financialization, focusing on how financial logics are emerging within a state-led economy.

Paper long abstract:

This article investigates the development of China’s carbon markets through the lens of financialization, focusing on how financial logics are emerging within a state-led economy. Building on a conceptual framework comprising five interrelated indicators: assetization, financial actor participation, derivative instrument development, speculative trading behaviour, and discursive framing, the analysis interrogates whether, how, and to what extent financialization has taken root in China’s national emissions trading system (ETS). Rather than presuming a linear or liberal trajectory, the article theorizes financialization as partial, contingent, and state-curated. Through a periodized account of three key phases: regional pilot programmes (2011–2016), institutional consolidation (2017–2020), and the national ETS launch (2021–present), the article traces the evolving architecture of carbon governance and identifies signs of financialization. Empirical findings demonstrate that while carbon is increasingly framed as a financial resource and embedded in registry systems, its circulation remains tightly regulated, derivative instruments are prohibited, and speculative trading is institutionally precluded. Financialization in China’s ETS thus reflects a hybrid regime in which market tools are selectively mobilized but remain subordinated to administrative control and developmental priorities. By conceptualizing this process as partial financialization, this article contributes to broader debates on environmental governance and offers a framework for understanding how financial logics can be embedded without financial liberalization.